Next hurricane season looms over energy in Gulf

Plenty of repairs still to go

Six weeks before this year's hurricane season begins in the Gulf of Mexico, the oil and gas industry is far from finished repairing the damage done by last year's storms.

Divers have yet to inspect half of the platforms hit by Hurricanes Katrina, Rita and Dennis. Some crews that are usually available to fix platforms and oil rigs are permanently shutting smaller wells that aren't worth restoring.

"Repair and assessment operations are going on as we speak and the hurricane season is just around the corner now," said Eugene Kim, a senior energy analyst at Wood Mackenzie in Houston. "Resources are already stretched to the limit."

About 22 percent of Gulf oil production and 13 percent of gas production is still out of service, according to a government report Wednesday. Concern that the storm season, running from June to November, may bring further disruption helped push oil prices to records this week.

"We just have to basically hope that we don't have a hurricane come back into the Gulf of Mexico this summer," said Matt Simmons, founder of Simmons & Co. in Houston, an oil and gas industry investment bank. "We haven't fixed yet, by any stretch of the imagination, everything that got broken."

"We don't have the resources where we can run out and inspect everything that we have to inspect in the timeframe that we have to do it," said Allen Verret, executive director of the Offshore Operators Committee, an industry group in New Orleans.

About 90 million cubic feet of daily gas production and 25,500 barrels of oil output will never come back, according to the Minerals Management Service. The numbers could rise as more platforms are inspected, analysts said.

Oceaneering International, a Houston-based company that supplies divers, unmanned submarines and equipment, last month won a two-year, $50 million contract to shut down wells and remove platforms.

"This isn't fixing anything. This is tearing it all apart," Oceaneering International spokesman Jack Jurkoshek said. He declined to name the client.

Companies such as Transocean and El Paso Corp. are changing procedures to limit damage and speed recovery from any hurricanes that strike in the Gulf, applying lessons from Katrina and Rita.

Transocean has gone to 12 mooring points from eight to secure some of its biggest offshore drilling rigs. El Paso will have mobile refueling stations for helicopters it needs to evaluate damage and jump-start repairs. Halliburton Co. is installing electrical gear in its Louisiana plants that can be pulled out and protected from saltwater if flooding is expected.